Government affairs consultancy Cornerstone released a report over the weekend addressing how a Donald Trump or Kamala Harris presidency might affect energy policy in 2025 and beyond.
The 20-page report for clients examined the impact that each regime might have on electricity, regulation, biofuels, hydrogen, renewables, pipeline, LNG and carbon management.
Cornerstone calculates that over $1.6 trillion in federal dollars and tax credits were authorized or appropriated by laws passed during the Biden administration. Cornerstone estimates that only about 17% of $1.1 trillion in direct funding has gone out the door.
Ahead of the election, the Biden administration is racing to push out as much federal funding as possible, aware that a newly elected President Trump might move immediately to curtail some of the spending.
Trump has stated publicly that he would roll back measures that include EV tax credits and has indicated that he would immediately act to increase production of oil and gas on federal lands and offshore. Policy initiatives aimed at challenging additional offshore wind buildout would also be likely and moves to amplify LNG export capability are planned.
Cornerstone noted that Congress will ultimately determine how far a second Trump administration can go in rolling back some of the initiatives pursued by the Biden-Harris regime. The former president has made comments that suggest antipathy toward new spending and regulations in the energy and environmental space. The balance of power in Congress will ultimately determine how far he could go to roll back measures.
On a broad basis, the much-discussed Project 2025 platform sees significant rollbacks targeted at the Department of the Interior, EPA and several other agencies.
On the other hand, the Harris-Walz ticket would probably step up initiatives that focus on a clean energy transition. Harris has a record on energy issues from her tenure as a California attorney general and senator as well as rhetoric from her 2020 presidential campaign.
One immediate requirement for the Harris-Walz ticket involves shoring up and defending various policies and initiatives included in the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. Cornerstone believes that the Democrats will be required to defend some of the funding in the wake of the "near gutting of the Chevron doctrine" by the Supreme Court. That decision reopens channels for relitigating a number of regulatory initiatives in the energy sector.
On a more particular level, Cornerstone provided observations regarding ramifications of a Harris or Trump victory.
Federal Oil and Gas Production: A Harris-Walz administration would no doubt come with increased debate as to activity on federal lands and waters. The previous administration pushed offshore wind with a goal of deploying gigawatts of offshore wind power by 2030. The ticket would no doubt continue policies that are more restrictive on offshore oil and gas and limited leasing activity to the western and central Gulf of Mexico. A Harris administration might hold new Gulf of Mexico lease sales in 2025, 2027 and 2027 along with other regions.
A Trump-Vance administration would be clearly supportive of a faster pace for offshore oil and gas leasing in the Gulf of Mexico, but it could face restrictions with congressional action needed to develop a new five-year leasing program. The Trump-Vance team does not have a favorable outlook on offshore wind leasing. Trump stated earlier this year that offshore wind turbines "destroy everything." He has promised to end the practice on "Day One."
Onshore Oil and Gas: The record shows less frequent oil and gas lease sales against the backdrop of the Biden administration with higher royalties and far less acreage. Harris did criticize fracking years ago but has amended that tact. An emphasis on climate and environmental impacts would come with the Democrats along with a push toward more renewable energy.
A Trump-Vance team would pursue more frequent leases and attempt to incentivize participation in them. Robust quarterly onshore lease sales might be employed along with an easing of emission reduction and monitoring requirements. More specifically, Trump-Vance would probably act to reverse Biden administration moves that halted leasing activity in the Arctic National Wildlife Refuge as well as add millions of acres for future leasing in the National Petroleum Reserve in Alaska.
Biofuels/Renewable Fuel Standard: A critical path involves the "Set Rule" where EPA set up targets for renewable fuel in 2023 for the 2023-2026 period. The Biden administration is not yet working on Set Rule 2.0, so that means nothing will be released by November. If Harris wins, a proposed rule might come just after the election, whereas a Trump victory would wait until various administration positions were filled. Importantly, either scenario might delay the final volume targets until late 2025 or early 2026, creating uncertainty across the RFS supply chain.
e-RINS: Either incoming administration will have to address the issue of e-RINs which were first introduced in the 2023 set rule proposal. Electric vehicle manufacturers could generate e-RINS based on the electricity used to produce EVs, as long as it comes from a qualifying biofuel. EPA decided not to finalize e-RINs back in 2023.
A Harris/Walz administration would no doubt support e-RINs as part of an effort to boost EV production. A Trump administration would require considerably more persuasion.
Small Refinery Exemptions: SREs: were treated dramatically different during the Trump and Biden administrations. Under Trump, many more SREs were granted. In contrast, the Biden administration issued no SREs, arguing that obligated parties could not demonstrate disproportionate economic harm. A Harris win might preserve that stance, whereas a Trump win would likely see eased restrictions and a reopening of the door for SREs.
E15: Both the Trump and Biden administrations issued emergency waivers to allow year-round sale of E15. A permanent solution requires congressional action and at the moment there is no clear path. Cornerstone does note, however, that biofuel groups have praised Gov. Tim Walz as an advocate for the biofuels industry.
Pipelines: Harris supported the cancellation of the Keystone XL Pipeline. A Trump-Vance administration might seek to restore policy initiatives from Trump's first term, including permits for Keystone XL as well as support development for a myriad of oil and gas pipeline projects.
EVs: Trump has indicated that he would like to stop all EVs, whereas a Harris administration would probably continue plenty of support such as funding for charging and fueling. A Trump/Vance administration would probably divert or work to impound funds away from those projects.
Regulatory Bodies: In his first go-round, Trump proposed budget cuts at the Department of Energy. Some insight from Project 2025 suggests that there could be significant cuts to competitive programs at DOE. Soon after he was inaugurated in 2017, Trump put a freeze on EPA grants and contracts, but the freeze only lasted a month.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
--Reporting by Tom Kloza, tkloza@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com
(END) Dow Jones Newswires
08-13-24 1415ET
